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Customers Of FTX Are Still Dealing With The Collapse Of The Crypto Platform

Customers Of FTX Are Still Dealing With The Collapse Of The Crypto Platform
Lee Rees, 43, a cryptocurrency trader located in London, made a nice income off of momentary price variations in the crypto market on a select few exchanges, one of which was FTX.
Rees lost $100,000, or roughly half of his annual income, when FTX crashed last year.
"It affected my life," he said. "I had a life to pay for. It's like your boss doesn't pay you. You can't live, can you?"
Rees is one of more than a million clients who could suffer damages as a result of FTX, one of the biggest cryptocurrency exchanges at the moment, abruptly ceasing operations and declaring bankruptcy in November. It immediately became apparent that consumer monies had vanished.
Sam Bankman-Fried, the founder and former CEO of FTX, is accused of stealing $10 billion from unwitting clients to support his hedge fund Alameda Research, purchase opulent residences, and pay for political contributions. This week in New York, his trial got underway.
Earlier this week, Bankman-Fried's attorney said in court that although his client did not steal money from customers, he neglected risk management. To the allegations, Bankman-Fried has entered a not-guilty plea.
Some FTX customers are being contacted by the prosecution to testify that they were informed their assets were secure and to discuss how the company's failure affected them.
Customers Reuters spoke with claimed they had formed support networks to aid one another in navigating the difficult bankruptcy claims procedure. However, some claimed they had been the target of con artists claiming to be able to collect their money.
Undeterred, some people have returned to the crypto roller coaster.
"As the crypto market has recovered, many FTX customers are concluding that they can sell their claim, buy crypto again, and do much better than letting their claim depreciate," said Matthew Sedigh, CEO of Xclaim, a bankruptcy claims exchange.
The cryptocurrency market expanded quickly in 2020 and 2021, but in 2022 token prices fell precipitously as investors shifted their money to other investments and interest rates soared, leading to a series of disasters.
According to Xclaim, there are currently between $30 billion and $35 billion worth of cryptocurrencies locked up in cryptocurrency bankruptcy, affecting over 15 million people. According to Xclaim, FTX had around $16 billion in crypto locked up when it crashed.
A specialist appointed to handle the bankruptcy, John Ray, has spoken about FTX's poor financial record-keeping practises and how client money was utilised to purchase residences and other personal items for employees. This complicates the bankruptcy procedure.
Rees described the claim submission process as a "nightmare" and did so through a website made by the bankruptcy administrators Kroll.
"All these terms were so complicated. You need a lawyer to understand it.... We don't know if we're getting our money back or not."
Email inquiries for comment to Kroll and FTX received no response. As of April, FTX had recovered $7.3 billion of the missing money, but according to Reuters's interviews, no money had yet been returned.
"I think there is a risk that there will be many victims who will find themselves victims again because of this procedure,” said Maxime, a 32-year-old Belgian, who has also found the bankruptcy claims process difficult.
Maxime, who requested that Reuters not use his full name, claimed to have made a "six-figure" sum on FTX since 2017 by trading cryptocurrency. "This amount was above all the hope of a better life," he stated.
Due to the personal information they contained, some creditors Reuters spoke with reluctant to release the supporting documentation for their FTX claims. The amount of their assertions could not be independently verified by Reuters.
Prosecutors called Marc Antoine-Julliard, an FTX client who had assets with FTX valued at roughly $100,000, earlier this week. He claimed to have thought Bankman-Fried "wanted to do good." When asked how he felt when his request to withdraw money from FTX was denied just days before FTX filed for bankruptcy, he responded, "Extremely anxious."
FTX creditors have established support groups in search of answers. Maxime stated via email that he had joined numerous, including a 3000 member Telegram group. "We discuss FTX assets, procedures… it's a great support."
In order to combat misinformation, financier Sunil Kavuri, who claimed to have lost "seven figures" on FTX, started posting details about the bankruptcy on social media site X, formerly known as Twitter.
He gained a following rapidly and claims to now get dozens of messages from creditors seeking assistance every day.
"I thought, I have to do something." The creditors he speaks to are "really angry" and "hurt," he said. "It's really sad."
New frauds now frequently target creditors. Maxime reported that he had received emails directing him to a phishing website that claimed he was qualified to reclaim his monies. Kavuri said that he had been the target of similar tactics.
Since the bankruptcy process is anticipated to take until 2024, several creditors have sold their claims out of frustration. According to Sedigh, Xclaim has over 2,000 FTX claims for sale, valued at over $610 million at the cryptocurrency values of late November.
Maxime, who is continuing the bankruptcy procedure, stated that he will quit investing in cryptocurrencies if he does not receive his money back. But "the industry will survive," he asserted, adding that he will be "more cautious" about the platforms he chooses.

Christopher J. Mitchell

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